With the markets down about 9.5% since the 10/9 top, below we revisit our list of the best and worst performers in the Russell 1,000. As shown, FSLR, MLNM, TEK, DLB and AIZ are the best performers, while PMI, ETFC, WCG, ABK and IMB are the worst. While the Russell 1,000 is down 9.51% since 10/9, the average stock in the index is down 11.27%, indicating slightly better performance from large cap names.
Even though the S&P 500 Technology sector has not reached its lows from August, the percentage of stocks in the sector above their 50-day moving averages has reached new lows. Currently, just 13% of Technology stocks are above their 50-days, the lowest level in at least a year. This breadth measure would indicate that the sector has further to go on the downside.
In today's Wall Street Journal, Edward Hadas highlights ten things Wall Street can be thankful for this Thanksgiving. But let's get real. Investors are also unthankful for quite a few things this year. We have listed some of them below in no particular order. Feel free to post what you're unthankful for in the comments section.
Wall Street is unthankful for:
Doug Kass' This Bear Sees a Year-End Rally column
Stan O'Neal's golf habit
James Cayne and his bridge, golf, and other off-the-job activities that don't involve running Bear Stearns
Twice as many Fed forecasts
Those damn Case-Shiller housing numbers
Freddie Mac, Fannie Mae
CDOs, SIVs, MLEC and other structured products that sound like and are about as fun as STDs
All joking aside, however, we're still thankful for much more than we're unthankful for (notably this awesome Turducken for dinner tomorrow). Have a great Thanksgiving!
As of midweek, the percentage of Bespoke readers marking "Bearish" as their current view of the S&P 500 stands at 59%. This is the highest level reached since the 64% "Bearish" level we saw on September 16th.
Remember, you can vote in the Bespoke Market Poll whenever you want as your thoughts change, so if you haven't participated, let us know what your current thoughts are on the S&P 500 in the poll below.
If you have been wondering why it has taken so long for Citigroup to name a successor to Chuck Prince, look no further than the company's Corporate Suite, or for that matter, Corporate Hotel. Even after Chuck Prince's 'retirement', there are currently 122 members on Citi's Management Committee. That's bigger than the US Senate, and we all know how long it takes them to make decisions.
Even before accounting for today's weakness, this November is shaping up to be the third worst since 1980. In the table below we highlight the performance of the S&P 500 during each November since 1980. As shown, the only two years when the month was worse were in 1987 during the aftermath of the October crash, and 2000 when Al Gore and George Bush were fighting over who won the election.
Mark Hulbert wrote a column in the New York Times this weekend highlighting a recent study finding that individual stocks perform better or worse based on the various months of the year. We decided to create a database on individual stock seasonality so investors could see how their stocks typically perform during each month. Below we highlight GE's historical seasonality (as it looks in our database). As shown, GE's best month is December and its worst month is February. Click here to download a sample of our database for six Dow stocks (We provided a database of all 30 Dow stocks to Bespoke Premium members earlier today). Simply enter in one of the six tickers listed in the file to see each stock's average performance during the twelve months of the year. If you would like to purchase this database for a broader index or a specific portfolio of stocks, please call 914-315-1248.
Just like the dog days of August, the week of Thanksgiving is typically quiet for the equity markets. This year, however, has proven to be the exception. Today's volume in the S&P 500 ETF (SPY) was the highest since August 16th when the S&P 500 hit its intraday low of the prior correction. The chart below plots the daily volume of SPY since the start of the third quarter. Red bars indicate days where the market was down, while green lines indicate up days.
At the end of October, it looked as if the S&P 500 was on track to close near the consensus year-end price target among major Wall Street strategists. With the recent correction, however, that price target is 11.78% away from current S&P 500 levels. And the index is 85 points below the lowest year-end price target of 1515 (JP Morgan). Even though the index has declined, strategists have not budged in their estimates, indicating they still expect a year-end rally.
Below we highlight ETFs traded in the US with the highest short interest ratios. We limited our list of over 500 ETFs to ones that trade more than 100,000 shares per day. If the market ever decides to rally again, these ETFs may benefit more than others as short covering comes into play. As shown, the Biotech ETF (BBH) has the highest short interest ratio at 9.98, followed by Basic Materials (IYM) at 9.89.
Below we highlight our trading range charts from the Bespoke Sector Snapshot available to Bespoke Premium subscribers. The red area is considered overbought while the green area is considered oversold. If the price moves below the green area, the sector is considered extremely oversold, and a short-term bounce is usually in the cards. Currently, Financials, Industrials, Energy, Consumer Discretionary and Telecom are trading well into oversold territory below the green zone.
Looking for more equity market research? Subscribe to Bespoke Premium to fulfill your needs.
Below we have updated our historical trading range and P/E charts of ten major global equity markets. The dark blue line represents the index's price, while the green line represents the index's trailing 12-month P/E ratio. The shaded green area represents two standard deviations above and below the index's 50-day moving average. When the price moves above or below this area, the index is considered overbought or oversold. Based on current prices, the US, UK, France, Germany, Japan and Italy are oversold, while no indices are overbought. The P/E ratios for European indices have declined with prices and look attractive. The S&P 500's P/E ratio has remained flat even though the index has declined in price. Notice how low the P/E ratio of the S&P got during the August correction and compare it to current levels. (Those Financials are ruining the earnings party for everyone.)
While yesterday's after-hours news was generally positive, and this morning the pre-market Dow futures are up over 100 points, overnight trading overseas was anything but quiet. Both the Hong Kong and Japanese equity markets opened sharply lower but then rallied in their afternoon sessions to finish up over 1%. Hong Kong's intraday range was over 5%, and the Hang Seng had its largest intraday point range ever.
Various news sources are reporting that $1 bln hedge fund Copper Arch has notified investors that it will liquidate its holdings and return funds to investors on December 31st. While the fund is reportedly not under any financial stress, news of hedge fund liquidations cause some investors to shoot first and ask questions later. Often some investors will try to find out what a particular fund owns and then short those holdings knowing there is going to be a forced seller. The list below highlights Copper Arch's positions as of 9/30/07, sorted by the percentage of each company the fund owns. If you follow any of these stocks, and notice any unusual volatility, reports of the fund winding down operations may be the cause.